| * |
Included in additions in note 5 is R5.3 million of software and R4.5 million of customer relationships which
relate to the purchase price allocations performed for Panacea Mobile Proprietary Limited and TicketPros
Proprietary Limited respectively in terms of IFRS 3(R): Business Combinations. Deferred tax to the value
of R1.5 million and R1.3 million respectively was raised on recognition of this intangible asset. |
TicketPros Proprietary Limited was acquired with the objective of acquiring a platform in
order for Blue Label Telecoms Group companies to expand their product offering to existing
TicketPros customers.
In most business acquisitions, there is a part of the cost that is not capable of being
attributed in accounting terms to identifiable assets and liabilities acquired and is therefore
recognised as goodwill. In the case of the acquisition of TicketPros Proprietary Limited, this
goodwill is underpinned by a number of elements, which individually cannot be quantified.
Most significant among these is management’s experience and the relationships held by
management.
Blue Label Engage Proprietary Limited was purchased with the objective of entering into the
loyalty and customer engagement markets which meets the Group’s objective of providing a
holistic customer engagement strategy for potential customers and expands the Group’s
revenue streams.
In most business acquisitions, there is a part of the cost that is not capable of being
attributed in accounting terms to identifiable assets and liabilities acquired and is therefore
recognised as goodwill. In the case of the acquisition of Blue Label Engage Proprietary
Limited, this goodwill is underpinned by a number of elements, which individually cannot be
quantified. Most significant among these is management’s experience and the relationships
held by management.
The contingent consideration arrangement requires BLT to pay in cash the former owners of
Blue Label Engage Proprietary Limited an additional amount arrived at by multiplying the
amount by which the headline earnings of Blue Label Engage Proprietary Limited in its 2013
financial year exceeds R600 000 by four, capped at a maximum of an additional R2.6 million.
The potential undiscounted amount of all future payments that the Group could be required
to make under this arrangement is between zero and R2.6 million.
The fair value of the contingent consideration arrangement R0.3 million was estimated by
applying the income approach. The fair value estimates are based on a discount rate of
18.46% and assumed probability-adjusted profit in Blue Label Engage Proprietary Limited of
R0.4 million.
Panacea Mobile Proprietary Limited was purchased with the objective of utilising their
software system to grow and expand the Group’s operations and revenues within the
messaging market in South Africa and Africa. A large portion of the purchase price in this
transaction was allocated to the internally generated software system which had not been
capitalised separately within the company.
In most business acquisitions, there is a part of the cost that is not capable of being
attributed in accounting terms to identifiable assets and liabilities acquired and is therefore
recognised as goodwill. In the case of the acquisition of Panacea Mobile Proprietary Limited,
this goodwill is underpinned by a number of elements, which individually cannot be quantified.
Most significant among these is the synergy with other Blue Label Telecoms Group
companies.
The contingent consideration arrangement requires BLT to pay in cash the former owners of
Panacea Mobile Proprietary Limited an additional amount of up to R1.5 million (pro-rated) if
the profit after tax for Panacea Mobile Proprietary Limited’s 2013 financial year is no less
than R4.2 million. An additional amount of up to R1.5 million (payable over 10 equal periods,
capped at R150 000 per period), based on the achievement of certain criteria in respect of
a customer contract being achieved by Panacea Mobile Proprietary Limited is also payable.
The potential undiscounted amount of all future payments that the Group could be required
to make under this arrangement is between R1.5 million and R3 million.
The fair value of the contingent consideration arrangement of R2.3 million was estimated by
applying the income approach. The fair value estimates are based on a discount rate of
18.46% and assumed probability-adjusted profit in Panacea Mobile Proprietary Limited of
R4.2 million and R5.7 million respectively.
| |
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|
|
| |
|
|
Multiserv
Proprietary
Limited
R’000 |
|
Date acquired
% acquired |
|
|
Franchisor
of retail
outlets
January
2012
100 |
|
| At 31 May 2012 |
|
|
|
|
| Assets |
|
|
7 697 |
|
| Liabilities |
|
|
7 725 |
|
| Revenue since acquisition |
|
|
3 467 |
|
| Profit after tax since acquisition |
|
|
774 |
|
Had this acquisition of subsidiary taken place at the beginning of the financial year they would
have contributed R9 million to revenue and R0.3 million to net profit after tax. The actual
contribution to revenue and net profit after tax for the year was R3.5 million and
R0.8 million.
The fair value of the net assets approximated the assets acquired on 1 January 2012.
| |
|
|
|
|
| |
|
|
Multiserv
Proprietary
Limited
R’000 |
|
| Cash and cash equivalents |
|
|
897 |
|
| Property, plant and equipment |
|
|
370 |
|
| Intangible assets* |
|
|
5 481 |
|
| Loan receivable |
|
|
2 091 |
|
| Inventories |
|
|
1 552 |
|
| Receivables |
|
|
1 212 |
|
| Current tax assets |
|
|
143 |
|
| Borrowings |
|
|
(5 210) |
|
| Deferred tax* |
|
|
(1 512) |
|
| Bank overdraft |
|
|
(158) |
|
| Payables |
|
|
(1 780) |
|
| Fair value of net assets acquired |
|
|
3 086 |
|
| Goodwill |
|
|
5 847 |
|
| Total purchase consideration |
|
|
8 933 |
|
| Loans acquired |
|
|
5 068 |
|
| Less cash and cash equivalents in subsidiary |
|
|
(739) |
|
| Cash flow on acquisition |
|
|
13 262 |
|
|